Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

Support this site! Clicking the links (below) takes you to
Amazon.com. If you buy ANYTHING, they pay for the referral.

Head-and-Shoulders Top Trading Tips

Compute the height from the head
(A in the Measure Rule figure to the right) to the
neckline directly below (B) then multiply it by the
above "percentage meeting price target."
Subtract the result from the breakout price (C). The
breakout price is where price
crosses an up-sloping neckline, or when the neckline slopes downward, use the right
shoulder armpit.

Price reversal

Price must have something to reverse, so if the rise leading to the pattern is small, expect a small decline.

Confirmation

Wait for confirmation before placing a trade.

Trends

A short-term rise leading to the pattern results in the best post breakout performance.

Velocity

A high velocity rise leading to the pattern often results in a larger decline post breakout.

Head-and-Shoulders Top Example

The above figure shows an example of a Head-and-shoulders top chart pattern. The left shoulder
(LS) appears above the right shoulder (RS). But, the two shoulders appear symmetrical about the head. A neckline shown in blue, joins the two
armpits. Where price closes below the neckline, a breakout occurs and it also confirms the chart pattern as being
a valid head-and-shoulders top. A pullback occurs in this example just to make trading interesting.